Yesterday the euro fell against most of its major peers as Spain’s bailout spurred concern that the sovereign-debt crisis is deepening as it spreads among indebted nations before Greek elections June 17.
The 17-nation currency earlier rose, touching a two-week high, after Spain asked for as much as 100 billion euros ($126 billion) to save its banking system, making it the fourth member of the currency bloc to seek a rescue. The bailout helped move Italy to the front lines of the crisis, as bets increased Europe’s third largest economy may be the next one to succumb.
Seven months after winning a landslide victory, Spanish Prime Minister Mariano Rajoy was forced to abandon his bid to recapitalize banks without external help. The bailout loan will be channeled through the state’s bank-rescue fund, known as FROB, and extended to lenders that need it, Economy Minister Luis de Guindos Jurado said in Madrid on June 9.
Spanish and Italian 10-year bonds fell for a fourth day, reversing earlier gains. The Spanish yield rose 31 basis points to 6.52 percent, while the rate on the Italian securities climbed 27 basis points to 6.04 percent.
Italy’s economy, the third-biggest in the region, shrank 0.8 percent in the first three months of this year from the fourth quarter, Istat, the Rome-based national statistics institute said, confirming an initial estimate. Household spending decreased 1 percent and exports fell 0.6 percent.
EUR/USD: yesterday the pair fell on two figures, lowered below $1.2500.
GBP/USD: yesterday the pair fell below $1.5500.
USD/JPY: yesterday the pair traded in range Y79.35-Y79.70.
UK data at 0830GMT sees the release of industrial production data for April. In clear focus for Tuesday, German Chancellor Angela Merkel speaks at 1200GMT at a conference organised by the CDU economic council. The Finnish PM speaks around the same time. US data continues with the 1230GMT release of the Import/Export Price Index, while at 1255GMT the Johnson Redbook weekly chain store sales are due. At 1400GMT, IMF Managing Director Christine Lagarde speaks in Washington on the UN Conference on Sustainable Development to be held in Rio De Janeiro, to the Center for Global Development.
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